Japan

Main article: KFC in Japan

Japan is the third-largest market for KFC after China and the United States with 1,200 outlets. In Japan, 70 percent of sales are takeout, with customers tending to buy fried chicken for parties and other special occasions and eating it as a side dish.

KFC Japan was originally formed as a joint venture between the American parent and the Japanese Mitsubishi Corporation. After four years of negotiations, Mitsubishi was awarded the franchise rights to KFC in Japan, and a test store was opened at the Osaka World Expo in March 1970. After the début proved to be a success, the first store proper was opened in the suburban location of Nagoya in November 1970. The American parent wanted suburban locations, whereas Mitsubishi had argued for city centre locations, as the car had not been widely adopted in Japan at that time. Two more locations were opened in Osaka, but the stores struggled, and after less than a year operations had lost JP¥ 100 million. As a result of this failure, Mitsubishi's original plan for urban locations was pursued.

The first new strategy store opened in Kobe in 1972, an upmarket residential area with a large Western expatriate community. The new strategy was a success, and by December 1973, 100 outlets had been opened. In December 1974, KFC Japan began to promote fried chicken as a Christmas meal.[ Eating KFC as a Christmas time meal has since become a widely practised custom in Japan.Harland Sanders himself visited the Japanese operations in 1972, 1978 and 1980.]

In August 1990, KFC Japan was listed on the Tokyo Stock Exchange. KFC had benefited from the economic boom in Japan during the 1980s, but a rapid expansion of outlets saw franchisees taking market share from each other, and around 100 outlets were closed down in the mid-1990s. In 2000, KFC Japan reported sales of nearly $598 million. In December 2007, Mitsubishi assumed majority control of KFC Japan in a JP¥ 14.83 billion transaction.